Garage Rentals - terms conditions - need advice...

[craigsherley]

Hello all,

I am renting out a heated single garage in Calgary`s SE and am asking $150/mo for a 12 month term - renewable at lease end for another 12 months. The problem I am encountering is resistance from the market on the length of term (feedback on price is very good). Most potential tenants want something close to a 6 month w/ the option to renew either month to month or for another 6 months at a time. Obviously this doesn`t work too well in my favour for fear that they don`t renew after the initial 6 months and I`m stuck with an empty garage come spring/summer. I obviously want a longer term lease locked in to minimize my workload with renewals and keeping a long-term cash flow.

My dilemma is that I have a good prospective tenant who is asking for these terms but I`m not sure that if I refuse the 6 month term offer and request the 12 month term that he`ll stick around. What type of experience have other REIN memebers had on this topic? Are you getting 12 month leases or are you bending to shorter term leases? Do tell...

Thanks,

Craig

 

[Bill]

QUOTE (craigsherley @ Nov 6 2007, 09:53 AM) Hello all,

My dilemma is that I have a good prospective tenant who is asking for these terms but I`m not sure that if I refuse the 6 month term offer and request the 12 month term that he`ll stick around. What type of experience have other REIN memebers had on this topic? Are you getting 12 month leases or are you bending to shorter term leases? Do tell...

Thanks,

Craig

Hi Craig,

Why not give the prospective tenant two options. If he wishes to lock in for a twelve month lease the rent would be $150 per month. If he wishes to only lock in for six months the rent would be $200 per month and he can renew for an additional six month lease when this one expires.

You can explain to him the security of a longer term allows you the flexibility of a lower rent, the unsecurity of possibly losing a tenant in six months is much riskier, along with the extra work involved, hence the increased rent. I would avoid the month to month scenario entirely as you may set yourself up for winter rentals only. Right now with the cooler weather demand is high, if we have a warmer spring you will lose all your leverage.

Good luck,

 

[bluerockgroup]

Craig,

Just like Bill said, offering that discount for a longer term lease or penalty for short term lease (depends is your view is pessimistic or optimistic

) is a great way to get the right tenants and cover your bottom line.

Cheers
Grant

 

[JohnS]

Hi Craig.
I just wanted to add that I`m currently renting parking (not even a garage, just parking) at my place in Ottawa, and I give the people a couple of options, so that I can best serve their needs.

1) Month-to-month - most expensive, and it goes up a bit in winter (to help cover getting it professionally plowed) ($95-$105)
2) 12-month lease - least expensive, rate remains the same ($90)
3) one lump sum for the year, same rate as 12-month lease ($90)

I had one person want the spot, but he was on a short term contract and didn`t know if he was going to be there after 4 months, so I let him pay one lump sum for the 4 months (I think it was $95). He has since renewed twice, so I brought the price down to $90 as he`s been there over a year. He liked it so much, he brought me another client (who was in the same boat) a bit after he joined , so I gave the second guy the same option, and I just got a call from the first guy on Nov. 1st that the two of them were going to start carpooling, but that he had already found me someone else to fill their old (2nd) spot.

So, even though other neighbourhood spots are cheaper (I think my neighbour gets about $70, maximum), my clients like the variety of options, and one has brought me 2 other people. I guess it`s time to give him another gift certificate for the movies!

Have a good one!

JohnS

 

[Kimberly]

John:

I too have extra parking spaces behind my triplex near downtown London. I came across a Kijiji request from someone taking a course for a 6 week period and after responding to his ad, he`s interested in renting a spot. I had thought of this idea to expand the income from the property and since an opportunity has arisen I thought I`d try it and perhaps then advertise.

Would you have a written rental contract with your parking clients that you could share with me? Of course my main concern is liability. Will be checking with my lawyer and insurance company as well.

Thanks for any insights,

Kimberly

 

[JohnS]

Actually, Kimberly, the only thing I had was a lease, but I don`t like the one I was using. (I had gotten it off of someone else, but it didn`t look very official.) I`m actually not even sure if I still have it, as the only one who wanted the lease has been there for about 3 years, and I was using it primarily to ensure that he was going to be there for a year or more. It`s one of the things I mean to rectify, but it`s one of the smaller ones, so I haven`t worried that much about it.

Sorry I can`t help you!

JohnS

 

[Kimberly]

thanks for the reply. Going to the lawyers today, will ask her about it.

Kimberly